Published: Saturday, July 26, 2014 at 7:58 p.m.

Last Modified: Saturday, July 26, 2014 at 7:58 p.m.

Jennifer Beguiristain plans to be in Gainesville at least three more years to work on a master’s degree in speech pathology, so she traded in her $700-a-month apartment for a $988 mortgage payment and arranged to rent out two rooms for $400 each.

The 27-year-old program assistant for the University of Florida College of Medicine recently closed on the four-bedroom, 1,500-square-foot house in northwestern Gainesville for $139,000 with a 5 percent down payment.

“I just feel like, renting, you’re throwing money out of the window,” she said.

If she gets a job out of the area when she is done with graduate school, Beguiristain likes her chances to make money on the property.

“The good thing about a house in that area is I do have the option to sell or rent it since it’s near Santa Fe (College) and the values are going up, so I think it was a very good investment,” she said.

First-time buyers such as Beguiristain are key to the housing recovery since new buyers allow existing homeowners to move up the housing food chain.

More people have been buying homes since the recession ended as confidence in the labor market and economy slowly returns, though the pace of sales growth in Gainesville has slowed since 2013 and Realtors throughout the U.S. are concerned that a lag in new home construction is creating a shortage that will drive up prices and make more homes unaffordable to that crucial first-time buyer.

Despite increasing incomes in Alachua County, rising monthly home costs — especially for mortgages — have put more homes out of reach for the middle class.

The median household income of $42,818 in 2013 could afford homes up to $203,000, based on monthly mortgage payments, insurance costs and property taxes adding up to 30 percent or less of income, the federal standard for affordable loans.

Despite a 3 percent average wage increase — which brings the median income up to $44,103 — the affordable home price limit dropped to $194,000 this year, largely because of increased monthly mortgage costs with the average 30-year fixed rate rising from 3.5 percent to 4.36 percent in the first quarter of the year. The rate has since dropped to 4.13 percent, so the median household income now can afford more house than it could at the start of the year.

With the affordable price limit dropping, the number of affordable homes listed for sale dropped to less than half of the current inventory of homes in the Gainesville Multiple Listings Service. Of 1,228 single-family homes listed in Alachua County, 51 percent are at or below the 2013 limit of $203,000 compared with 47 percent at or below the 2014 limit of $194,000.

A similar review by the real estate listings site Trulia in May showed that only 14 of the top 100 largest cities in the U.S. had a lower rate of homes within reach of the middle class, ranging from 14 percent in San Francisco to 86 percent in Akron, Ohio.

Median incomes vs. sale prices

Slicing the numbers another way shows that the prices of homes that are selling in Gainesville are well within the affordable range for a median household income.

The median sale price in the Gainesville metro area in the first quarter of 2013 was $159,000, with mortgage, tax and insurance expenses requiring at least a $33,194 income, well below the $42,818 median for that year.

The slightly higher median sale price of $160,000 for the first quarter of 2014 was also within the affordable range for a median income despite higher mortgage and insurance rates, with the higher monthly expenses requiring at least $36,065 in household income, compared with the $44,103 median.

A study of 27 large metros by the mortgage shopping site HSH.com showed that the salary needed to buy a median-priced home ranged from $29,789 in Cleveland to $137,130 in San Francisco. At $36,065, Gainesville would fall between No. 6 Atlanta at $34,183 and No. 7 Tampa at $36,438.

Professionals in the real estate industry caution that those numbers are based on a 20 percent down payment. Many first-time home buyers don’t have that much money on hand.

“It’s probably better to say 5 percent down for the average Joe, especially in the median income bracket,” said Gary Thomas, president of the Gainesville-Alachua County Association of Realtors. “Most cops who are married to a teacher don’t have 20 percent down.”

A lower down payment means higher monthly mortgage costs in addition to the expense of mortgage insurance required for anything less than 20 percent, adding to monthly costs and reducing the price a borrower can afford.

On the other hand, longtime Gainesville loan originator Leslie Remy said monthly ownership costs can be higher than 30 percent — up to 35 percent or 36 percent of income — depending on other debts. Total debt, including car notes and credit cards, can be as high as 43 percent of income.

“If you don’t have a lot of debt you could qualify for a mortgage payment of $1,150 to $1,200 a month on a $40,000 income,” said Remy, who asked not to name her employer. “It could be $150,000, $170,000 (for the loan) depending on your cost of insurance, taxes and all that.”

Standard down payments range from 5-20 percent. Affordable housing programs allow lower down payments, such as the Federal Housing Authority loan with 3.5 percent down and U.S. Department of Agriculture Rural Development loans with 100 percent financing.

Remy said she has been “very busy” writing loans this year with 50-60 percent of her business from first-time buyers spurred by life changes such as getting married or having a comfort level with their employment.

“That’s where it starts, when you get good employment,” she said.

Matt and Hallie Johnson recently bought a three-bedroom, 1.5-bath home in Micanopy on a USDA loan with 100 percent financing after Hallie was accepted into the UF veterinary school.

“We were waiting to find out where she was going to vet school,” said Matt Johnson, 27, a maintenance mechanic at UF.

Like Beguiristain, the Johnsons were paying $700 a month for a condo and wanted instead to put that money toward a $810 mortgage payment.

“When you’re paying rent, you don’t have to worry about lawns, so we really didn’t have any financial burden in terms of taking care of the place, but I knew that home equity and being able to purchase our first home would allow us to put that monthly income of rent toward something that might actually make us some money in the future,” Matt Johnson said.

Fewer affordable rentals

As median-priced homes sell quickly, that is also pushing up rental costs for homes in the median price range, said Tanya Chappell, broker and president with Secure Investments Realty & Management Corp.

Owners who rented out homes because they couldn’t get the sales price they wanted before are now able to sell the homes fairly easily at higher prices, lowering the availability of homes for rent and driving up rental prices.

Homes that rented for $1,000 to $1,500 now cost another $75 to $100, Chappell said.

She said more renters are becoming buyers in the moderate to median income ranges, but she thinks that has to do with confidence in the economy and their particular needs more than cost issues.

“Whether they’re going to be here at the university for a short-term contract or going to school, or they plan to make this area their home, to me that’s still going to be more of the deciding factor,” she said.

Lower-income people have more difficulty buying as they struggle with credit issues and saving money, she said.

A study by the Harvard Joint Center for Housing Studies showed that Gainesville has the second-highest rate of cost-burdened renters of 381 metro areas in the U.S. with 66 percent of renter households spending more than 30 percent of their incomes on rent, while 43 percent of renters spend more than 50 percent.

Much of that is driven by the large student population. A study by the UF Shimberg Center for Housing Studies that removes student-led households from the data shows Alachua County below the state average of low-income renters who spend more than 40 percent of their income on rent, with 29.1 percent in Alachua compared with 30.9 percent statewide.

A June report by the National Association of Realtors says that a lag in new home construction relative to job creation could create persistent housing shortages that drive up prices. Of 32 states the NAR says are not keeping up, Florida was singled out among five states where job creation has been particularly strong.

Among their concerns, builders are worried about the re-emergence of entry-level consumers in the face of student debt and tight credit, and the decline in affordability and purchasing power over the past year.

NAR chief economist Lawrence Yun said that historically one new home is built for every 1½ new jobs.

Gainesville added 1,000 jobs over the past year, according to Friday’s report by the Florida Department of Economic Opportunity. With 212 single-family housing permits issued through May, Gainesville is on pace to add just over 500 new homes this year, short of the nearly 670 needed to keep pace with job growth.

<p>Jennifer Beguiristain plans to be in Gainesville at least three more years to work on a master's degree in speech pathology, so she traded in her $700-a-month apartment for a $988 mortgage payment and arranged to rent out two rooms for $400 each.</p><p>The 27-year-old program assistant for the University of Florida College of Medicine recently closed on the four-bedroom, 1,500-square-foot house in northwestern Gainesville for $139,000 with a 5 percent down payment.</p><p>“I just feel like, renting, you're throwing money out of the window,” she said.</p><p>If she gets a job out of the area when she is done with graduate school, Beguiristain likes her chances to make money on the property.</p><p>“The good thing about a house in that area is I do have the option to sell or rent it since it's near Santa Fe (College) and the values are going up, so I think it was a very good investment,” she said.</p><p>First-time buyers such as Beguiristain are key to the housing recovery since new buyers allow existing homeowners to move up the housing food chain.</p><p>More people have been buying homes since the recession ended as confidence in the labor market and economy slowly returns, though the pace of sales growth in Gainesville has slowed since 2013 and Realtors throughout the U.S. are concerned that a lag in new home construction is creating a shortage that will drive up prices and make more homes unaffordable to that crucial first-time buyer.</p><p>Despite increasing incomes in Alachua County, rising monthly home costs — especially for mortgages — have put more homes out of reach for the middle class.</p><p>The median household income of $42,818 in 2013 could afford homes up to $203,000, based on monthly mortgage payments, insurance costs and property taxes adding up to 30 percent or less of income, the federal standard for affordable loans.</p><p>Despite a 3 percent average wage increase — which brings the median income up to $44,103 — the affordable home price limit dropped to $194,000 this year, largely because of increased monthly mortgage costs with the average 30-year fixed rate rising from 3.5 percent to 4.36 percent in the first quarter of the year. The rate has since dropped to 4.13 percent, so the median household income now can afford more house than it could at the start of the year.</p><p>With the affordable price limit dropping, the number of affordable homes listed for sale dropped to less than half of the current inventory of homes in the Gainesville Multiple Listings Service. Of 1,228 single-family homes listed in Alachua County, 51 percent are at or below the 2013 limit of $203,000 compared with 47 percent at or below the 2014 limit of $194,000.</p><p>A similar review by the real estate listings site Trulia in May showed that only 14 of the top 100 largest cities in the U.S. had a lower rate of homes within reach of the middle class, ranging from 14 percent in San Francisco to 86 percent in Akron, Ohio.</p><p><b>Median incomes vs. sale prices</b></p><p>Slicing the numbers another way shows that the prices of homes that are selling in Gainesville are well within the affordable range for a median household income.</p><p>The median sale price in the Gainesville metro area in the first quarter of 2013 was $159,000, with mortgage, tax and insurance expenses requiring at least a $33,194 income, well below the $42,818 median for that year.</p><p>The slightly higher median sale price of $160,000 for the first quarter of 2014 was also within the affordable range for a median income despite higher mortgage and insurance rates, with the higher monthly expenses requiring at least $36,065 in household income, compared with the $44,103 median.</p><p>A study of 27 large metros by the mortgage shopping site HSH.com showed that the salary needed to buy a median-priced home ranged from $29,789 in Cleveland to $137,130 in San Francisco. At $36,065, Gainesville would fall between No. 6 Atlanta at $34,183 and No. 7 Tampa at $36,438.</p><p>Professionals in the real estate industry caution that those numbers are based on a 20 percent down payment. Many first-time home buyers don't have that much money on hand.</p><p>“It's probably better to say 5 percent down for the average Joe, especially in the median income bracket,” said Gary Thomas, president of the Gainesville-Alachua County Association of Realtors. “Most cops who are married to a teacher don't have 20 percent down.”</p><p>A lower down payment means higher monthly mortgage costs in addition to the expense of mortgage insurance required for anything less than 20 percent, adding to monthly costs and reducing the price a borrower can afford.</p><p>On the other hand, longtime Gainesville loan originator Leslie Remy said monthly ownership costs can be higher than 30 percent — up to 35 percent or 36 percent of income — depending on other debts. Total debt, including car notes and credit cards, can be as high as 43 percent of income.</p><p>“If you don't have a lot of debt you could qualify for a mortgage payment of $1,150 to $1,200 a month on a $40,000 income,” said Remy, who asked not to name her employer. “It could be $150,000, $170,000 (for the loan) depending on your cost of insurance, taxes and all that.”</p><p>Standard down payments range from 5-20 percent. Affordable housing programs allow lower down payments, such as the Federal Housing Authority loan with 3.5 percent down and U.S. Department of Agriculture Rural Development loans with 100 percent financing.</p><p>Remy said she has been “very busy” writing loans this year with 50-60 percent of her business from first-time buyers spurred by life changes such as getting married or having a comfort level with their employment.</p><p>“That's where it starts, when you get good employment,” she said.</p><p>Matt and Hallie Johnson recently bought a three-bedroom, 1.5-bath home in Micanopy on a USDA loan with 100 percent financing after Hallie was accepted into the UF veterinary school.</p><p>“We were waiting to find out where she was going to vet school,” said Matt Johnson, 27, a maintenance mechanic at UF.</p><p>Like Beguiristain, the Johnsons were paying $700 a month for a condo and wanted instead to put that money toward a $810 mortgage payment.</p><p>“When you're paying rent, you don't have to worry about lawns, so we really didn't have any financial burden in terms of taking care of the place, but I knew that home equity and being able to purchase our first home would allow us to put that monthly income of rent toward something that might actually make us some money in the future,” Matt Johnson said.</p><p><b>Fewer affordable rentals</b></p><p>As median-priced homes sell quickly, that is also pushing up rental costs for homes in the median price range, said Tanya Chappell, broker and president with Secure Investments Realty & Management Corp.</p><p>Owners who rented out homes because they couldn't get the sales price they wanted before are now able to sell the homes fairly easily at higher prices, lowering the availability of homes for rent and driving up rental prices.</p><p>Homes that rented for $1,000 to $1,500 now cost another $75 to $100, Chappell said.</p><p>She said more renters are becoming buyers in the moderate to median income ranges, but she thinks that has to do with confidence in the economy and their particular needs more than cost issues.</p><p>“Whether they're going to be here at the university for a short-term contract or going to school, or they plan to make this area their home, to me that's still going to be more of the deciding factor,” she said.</p><p>Lower-income people have more difficulty buying as they struggle with credit issues and saving money, she said.</p><p>A study by the Harvard Joint Center for Housing Studies showed that Gainesville has the second-highest rate of cost-burdened renters of 381 metro areas in the U.S. with 66 percent of renter households spending more than 30 percent of their incomes on rent, while 43 percent of renters spend more than 50 percent.</p><p>Much of that is driven by the large student population. A study by the UF Shimberg Center for Housing Studies that removes student-led households from the data shows Alachua County below the state average of low-income renters who spend more than 40 percent of their income on rent, with 29.1 percent in Alachua compared with 30.9 percent statewide.</p><p>A June report by the National Association of Realtors says that a lag in new home construction relative to job creation could create persistent housing shortages that drive up prices. Of 32 states the NAR says are not keeping up, Florida was singled out among five states where job creation has been particularly strong.</p><p>Among their concerns, builders are worried about the re-emergence of entry-level consumers in the face of student debt and tight credit, and the decline in affordability and purchasing power over the past year.</p><p>NAR chief economist Lawrence Yun said that historically one new home is built for every 1½ new jobs.</p><p>Gainesville added 1,000 jobs over the past year, according to Friday's report by the Florida Department of Economic Opportunity. With 212 single-family housing permits issued through May, Gainesville is on pace to add just over 500 new homes this year, short of the nearly 670 needed to keep pace with job growth.</p>